Guest Commentary: The collapse of Obamacare

The health insurance exchanges that are the beating heart of Obamacare are on the edge of collapse, with premiums rising sharply for ever narrower provider networks, non-profit health co-ops shuttering their doors, and even the biggest insurance companies heading for the exits amid mounting losses.

Three states - Alaska, Alabama, and Wyoming - are already down to just a single insurance company, as are large parts of several other states, totaling at least 664 counties.

UnitedHealth is pulling out completely, Humana is pulling out of 88 percent of counties it was in, and last weak Aetna strongly suggested it will be exiting, too, unless it gets bribed to stay with a huge, annual infusion of direct corporate bailout payments from taxpayers.

Dealing with the wreckage will be at the top of the agenda for the new president and Congress next year, and their options will be limited - especially if, as appears likely, we will continue to have divided government.

The most likely outcome, then, is the muddled middle, keeping gravely ill Obamacare on life support, with the major policy fight being over the extent to which taxpayers should be forced to provide billions in corporate bailout cash infusions.

Aetna CEO Mark Bertolini was pretty blatant in a recent interview with Zachary Tracer of Bloomberg. Here’s the key part:

“Rather than transferring money among insurers, the law should be changed to subsidize insurers with government funds,” Bertolini said. “It needs to be a non-zero sum pool in order to fix it,’ Bertolini said.”

In other words: everybody is losing money, so taxpayers need to pick up the tab.

The Obama administration is already playing fast and loose with the law to shovel as many bailout bucks to insurers as they can - on top of Obamacare’s huge subsidies to lower income consumers and a penalty tax on people who don’t buy in. They shortchanged taxpayers by $3.5 billion that, contrary to law, they sent to insurance companies instead.

Democrats will support legalizing these payments and authorizing even larger direct corporate bailouts on an ongoing basis as a way to keep insurance companies in the Obamacare exchanges.

Republicans will be attacked as saboteurs for resisting bailout payments, but that misses the point. Direct corporate welfare to bribe companies to participate in a poorly designed program is throwing good money after bad.

We won’t be able to get to a real solution until we acknowledge that Obamacare is too rigidly structured and regulated to offer products people actually want, and needs to be reformed or replaced with genuine, functioning markets that give us a much wider variety of plans.

Before that can happen, Obamacare supporters need to be held accountable for the law’s manifest failures - not permitted to paper them over with billions more of our tax dollars.

Phil Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at phil@americancommitment.org.